Posts about Taxis

The Chinatown buses were able to flourish for two reasons: A loophole in parking rules allowed buses to idle on certain streets in Chinatown, and Ronald Reagan's Bus Regulatory Reform Act of 1982, which made it easier for interstate buses to pick up passengers and set rates as they pleased. By eliminating the costs of infrastructure, amenities and marketing, the Chinatown buses only have to pay for a fleet of buses, a limited staff and gas; this translates into $10 fares from New York to Boston.

Major operators like Greyhound caught on, leading them to develop the BoltBus, which follows the Chinatown bus model and is nearly as cheap, seemingly a lot safer and has reliable wi-fi. This is how the market is supposed to work in favor of people: Increasing the options for consumers and thereby lowering prices.

But that's not how it usually works in transportation. As someone who believes that strong regulation is incredibly important for industries such as Wall Street, which is literally tied to the economy of the rest of the world, or the energy industry, whose impacts on the environment can be irreversible, I also believe that transportation regulation at all levels of government is holding our cities and our economy back.

In many cities around the country, people are marooned by public transit that is often unreliable, infrequent, unsafe or just nonexistent. Private providers find it nearly impossible to supply alternatives. A start-up website called Uber that allows people to hail a licensed black taxi, recently was set up in a sting operation in Washington, DC by the local taxi commissioner for failing to comply with District regulations. Regulation has zeroed out private alternatives to public transit in cities, forcing people to take transit into their own hands—or, more accurately, into their own cars.

But what if there were other options? In New York, which has transit options that any other American city would envy, there's such great density that it supports many more niche transit options. "Dollar vans," which largely fly under the regulatory radar, are a popular service for many people in Brooklyn.

These kinds of systems called colectivos flourish in Latin and South America, as well as other regions of the world, where private cars and public transportation fail to meet users' needs.

A lack of competition in transportation options has caused all transit modes to be more expensive than they need to be. Why should an Amtrak from Philadelphia to New York routinely cost $45? A private Japanese company has just opened an office in Texas with plans to amass $10 billion to support a high-speed line between Houston and Dallas-Ft. Worth—one imagines that will beat Amtrak not just in terms of price, but speed of completing the project.

If we opened our streets and rails more transportation operators, undoubtedly it would benefit our intertwined problems of high prices, congestion and slow service. But just last Friday, the New York State supreme court thwarted Mayor Michael Bloomberg's attempt to sell more than $1 billion worth of taxi medallions that would have increased taxi service in underserved boroughs and allowed for street hailing.

To be sure, the idea of deregulated transportation sounds bad. Deregulated transportation in many developing countries is notoriously unsafe and can have grave consequences. But there needs to be a middle ground between rolling death traps and a transportation system that is killing our economy. New York Sen. Chuck Schumer's proposal of creating a clearly posted letter-grade system to identify the quality of Chinatown bus services is a great one; this model could be applied to other kinds of new transit providers that serve niche markets. Auctioning off transportation licenses or city-owned property to support infrastructure for alternative transportation modes could be a new source of revenue in other cash-strapped cities.

The Chinatown bus companies emerged from strong immigrant communities with an entrepreneurial work ethic; while the practices that prompted government intervention seem shady, let's not forget this country needs this kind of ingenuity to survive and our government should be working its hardest to support those who have found ways to bring new, inexpensive transportation options to our roads and rails.

Cross-posted at Next American City.

The commission plans to fund these initiatives with a surcharge of 50¢ per trip. Ron Linton, chairman of the commission, sees the new surcharge as a critical element of the proposed bill. "The creation of the Consumer Service Fund insures that funds obtained through a passenger-paid surcharge will be used to improve the quality of services for passengers," said Linton.

Other items in the bill would allow the taxicab commission to upgrade the fleet, carry out more inspections, provide incentives for drivers to purchase fuel-efficient cabs, and expand taxi service to all areas of the city. The commission also plans to add more robust tracking systems to monitor overall taxicab performance.

Survey showed public support for reforms

Cheh's office conducted an online survey about the provisions of the bill and taxi service in general. Responses by more than 4,000 metro area taxi riders showed that only 22% of respondents thought that the quality of taxi service in the District was good or excellent. 69% said it is worse than other major cities. The proposed taxi reform legislation and the requirement to accept credit cards found overwhelming support with 94% and 93% positive responses respectively.

In the survey, a majority of respondents supported higher taxi fares only if the quality of service improved. Belinda Li, a Chicago-based management consultant, testified at the hearing on Cheh's bill that the additional costs to hail a cab would put a burden on riders and potentially drive people away from riding taxicabs.

The hospitality industry supports the reforms as well. According to industry data, the District hosts over 17 million visitors a year, generating roughly $6 billion in expenditures in the city. An improved taxi service would allow visitors to get to their hotels and other destinations safely and efficiently.

"This is something we have been working on for quite some time," said Solomon Keene, President of the DC Hotel Association. "DC is a world class city so we want to make sure that we provide a world class taxi service."

Drivers less enthusiastic

Though the public supports the reforms, taxi companies have expressed opposition to the bill, citing cost concerns. The industry generally opposed the change from a zoning system four years ago to a meter system, and sees this new proposal as further undermining their ability to make a living.

At a public hearing earlier this year, drivers testified that they felt the effects of the bill on the industry were not fully taken into account before the bill was drafted. They questioned how the fund will be managed and whether drivers will be compensated adequately for expenses incurred to retrofit their vehicles. It is also unclear how soon the reforms can be implemented, since funding from the surcharge won't be available right away.

Other proposals may also affect taxi service in the District. In addition to Cheh's bill, Council chairman Kwame Brown introduced a bill to require that 10% of all cabs be wheelchair-accessible within 4 years.

Long-term questions remain

Beyond the short-term issues of fare increases and who bears the costs of implementing the reforms, there are unaddressed long-term concerns about the management of the industry. When Tommy Wells chaired the council committee with oversight over taxis, he expressed interest in making more major structural changes, possibly abolishing the taxicab commission and moving responsibility into DDOT and/or DCRA. However, Cheh has not pursued this approach.

In addition, the Council also considered and dropped the concept of a medallion system. Taxicab systems in major cities like New York and Chicago restrict the number of licenses issued and allow for licenses to be transferred between owners. In an open system like the District's it is relatively easy to operate a taxicab. As a result, independent operators saturate the market, making it easier for people on the street to get cabs, but driving down earnings for each driver.

In testimony at the public hearing, Belinda Li said that the District has one of the highest taxicab per-capita ratios in the country (12 per 1,000 residents), compared to Chicago (2.6 per 1,000 residents) and New York (1.6 per 1,000 residents). "The proposed bill," Li said, "does not restrict new cab drivers and does nothing to address the current oversupply issue." Not all residents may agree with Li about whether there is an "oversupply" today.

By choosing to put off addressing these fundamental challenges, the council will likely be forced to revisit taxi reform in the not-too-distant future. Until then, the reforms in the current bill will modernize the taxi fleet and make for a more pleasant cab ride in the nation's capital. Riders will be paying more, but should find that fewer surcharges make the final price less confusing as well.

MetroAccess is saddled with a poor customer service record. At a town hall meeting this past October, MetroAccess customers complained about poor treatment by drivers and call dispatchers, poor routing, long waits for pick up and drop off, and vehicle breakdowns. On a couple of occasions, clients of Iona Senior Services' Alzheimer's Day Program were dropped off at the wrong location, and it took hours to locate them. WMATA can do better than this, and taxis could help.

MetroAccess head Christian Kent has crafted a plan to fix the quality of MetroAccess service. Instead of having one vendor bid on the whole package of services, as in the previous contract, the RFP lets vendors bid separately to run the call center, the fleet services, and quality assurance.

Most jurisdictions of similar size do the same. Experts I spoke to feel that this is the best approach, especially having a different vendor handle quality assurance from the one(s) actually running the service.

But one piece of the plan does not make sense: decreasing taxi use from 20%, as specified in the old contract, to only 5%.

Research (cited at bottom) is clear that taxi paratransit services can be less costly than standard ADA paratransit:

• In 2005, Arlington County's taxi paratransit cost $20.50 per trip, versus $35 for WMATA.
  
• San Francisco's taxi paratransit costs $15-$18, versus $40 for Muni paratransit.
  
• Houston's ADA taxi service per hour is $32.10, versus $42.65 for paratransit van service.
  
• 50% of jurisdictions surveyed reported taxis saved money for transit agencies.

Beyond cost savings, there are other advantages. The taxi system has more flexibility. Taxis are there when you need them, can handle a trip without needing to know the day ahead of time, often come quickly, and force riders to wait less. They provide a safety net for peak service times, and fill in gaps in coverage. And customers like the direct, exclusive ride.

There are also challenges with using taxis. Some try to defraud the transit service. It's hard to monitor it, and drivers don't have as much training as the van services. Christian Kent cites these as reasons to decrease the amount of taxi use in the system.

Nevertheless, Arlington paratransit manager Steve Yaffe makes a strong case for taxi use. His system uses taxis to provide 50% of its paratransit service. He has demonstrated that the advantages clearly outweigh the disadvantages.

Yaffe said,

I recognize the difficulty in finding taxi vendors with sufficient internal controls and oversight over training, maintenance and accounting. Another difficulty with using taxis for this type of service is the dearth of jurisdictional reciprocity privileges for taxis being used to transport people with disabilities. However, new business models are being developed and have been implemented elsewhere to get around these obstacles and provide the necessary level of accountability and service oversight. The Metro Access RFP should not preclude the flexibility to increase future levels of taxi participation.

DC disability advocates testified at a January hearing on taxi service, chaired by Councilmember Mary Cheh (Ward 3), about the importance of providing more wheelchair-accessible taxis and drivers with training to serve those with disabilities. When I talked to Cheh about the possibility of the MetroAccess RFP reducing the use of taxis, she acknowledged that this appears to move in the wrong direction.

Instead of defining a percentage of taxi use for the system, WMATA should include specific quality standards for taxis. This will give all the jurisdictions the flexibility to improve quality, so that taxis can provide services for Metro Access users. This could lead to lower costs and better quality. 22 senior service providers in the District signed off on this recommendation. We hope Christian Kent listens.

Research citations:
Arndt, J. & Cherrington, L. (2007). The Role of Private-For-Hire Vehicles In Transit In Texas. Texas Department of Transportation and the Federal Highway Administration.
Burkhardt, J. (2010). Potential Cost Savings from taxi paratransit programs. Institute of Transport Studies (Monash). Social Research in Transport Clearinghouse.
Burkhardt, J., Doherty, J., Rubino, J., Westat, & Yum, J. (2008). A Survey On The Use of Taxis in Paratransit Programs. Easter Seals Project Action. Retrieved from www.projectaction.org
Chapman, Koffman, Pfeiffer, & Weiner (2010). Funding the Public Transportation Needs of an Aging Population. American Public Transportation Association.

A TechCrunch article argues that Uber's business model is legal, while in DCist, Ben Freed defends the sting in which Taxicab Commission chairman Ron Linton personally got involved in hiring and then punishing a driver.

Freed disagrees with the analogy in my Post editorial that taxis complaining about Uber is like Safeway complaining about upscale cupcake shops. Freed writes,

Not quite. Cupcakes, however widespread they've become, are not a regulated utility. Taxis are. ...

Linton, though, said he's responding to complaints he's heard from cabbies who say Uber's eating into their business and from customers who feel they've been overcharged. The sting was necessary reconnaissance, he said.

But this is exactly crux of the issue. Why are taxis a regulated utility while bakeries aren't? Why is electricity a regulated utility but backyard propane tank sales are not? Why are tap water fees regulated but not the bottled water prices we pay in the supermarket?

To say that taxis are different from cupcakes because taxis are regulated and cupcakes are not begs the question (in the grammatically correct sense).

It's not uncommon for one business to complain that another is "eating into their business." Whole Foods is eating into Giant's business. But Giant doesn't go to the DC Supermarket Regulatory Commission and ask them to take action to stop Whole Foods. Amazon has taken a lot of business away from brick and mortar retailers, which is too bad for our neighborhood corridors, but we don't respond by banning Amazon (though it would be fair to insist that both pay the same amount of sales tax).

But, many are saying, the difference is that Uber, or more specifically its drivers, may be breaking existing rules, while Whole Foods and Amazon are not. In some regards, this may present an important distinction, but from a public policy standpoint, it is somewhat irrelevant.

We can ask 2 questions: What are the rules now, and what should they be? Regulations can be beneficial or they can be harmful. There are many rules we don't have which ought to exist, and many that do exist which should be repealed.

If Uber is doing something which is not permitted to regular taxis, we can either stop Uber from doing that thing, or we can allow regular taxis to partake in the same behavior. As I said in my Post editorial, I've never used Uber, don't plan to, and don't care that much about Uber specifically as a company. But if they are competing unfairly against taxis, then let's let taxis compete against Uber rather than shutting down the competition.

When deciding which approach take, the Taxicab Commission should bear in mind one and only one principle: What's good for customers? The degree to which Uber is "eating into the business" of existing taxis is immaterial, and Linton should not be making decisions on that basis.

A common criticism of many regulatory agencies is "regulatory capture," shorthand for the way that an agency becomes more sympathetic to the needs of the industry it regulates than the interests of consumers. This happens because regulators tend to get to know their counterparts at regulated companies well, to see issues from the companies' point of view, and also look to those companies for future jobs.

The starkest example of regulatory capture is the Minerals Mining Service, which was supposed to be regulating deep-water oil drilling but instead ended up just speeding approvals and overlooking dangerous practices, ultimately with disastrous consequences.

Taxi drivers' main gripe against Leon Swain's leadership at the Taxicab Commission was that he didn't do enough to protect drivers' interests. They are suing Mayor Gray and Ron Linton as well, for not giving them more of a voice on the board. In short, drivers want DCTC to be more captured by its industry. However, that would absolutely not benefit customers.

That said, Linton's proposal for taxi rates does seem customer-centric. He wants to raise rates, but eliminate many of the confusing surcharges that annoy riders and make it easier for drivers to cheat customers. When the government has to set taxi rates, as it does for street hails, those rates should be high enough to ensure that driving a taxi brings in a decent living, not because it's a jobs program, but because having a lot of taxis is good for people who want a taxi. In turn, this also benefits drivers, a prime example of how public interest and the interest of drivers needn't always be in opposition to one another.

The debate over whether Uber is breaking a law right now is an interesting one, and it's fine for DCist and others to discuss it. But let's not lose sight of the longer-term question, as well. What are the right taxi regulations? How much do we need to regulate to advance the public interest, and which regulations are just protecting a small group of people from needed competition?

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What's more, Uber can actually improve the efficiency of "black cars," the for-hire sedans which spend a large portion of the day idling. While the Uber founder says they discourage drivers from accepting Uber trips while they are on a job, it is distinctly feasible to do with their system.

I used to live in Foggy Bottom, and when major summits came to town, the neighborhood would be covered with Town Cars and Tahoes with Virginia "For Hire" license plates. With the IMF, World Bank, and numerous upscale hotels in the area, the vehicles would sit idling all over Foggy Bottom and the West End. The cars often took up parking spaces for hours, double parking at times.

Uber gives them the ability to provide some trips instead of blocking lanes of traffic and every conceivable parking space. This would be good for everyone.

Ironically, the limousine industry should be the one that is more concerned about Uber. Their business is likely to change as long is Uber is around. If someone can book a black car on-demand, pay a mileage-based rate, and then book another one for a return trip, without having to pay for time in between, why, except for the most demanding situations, would anyone bother to hire a car service?

What's more, the taxi industry actually stands to benefit from the presence of Uber. At peak times, such as New Years' Eve, there are not enough cabs to go around, period. Uber maintains their reliability by using "surge pricing" to price out many people and find those customers who are desperate, or well heeled, enough to pay for that reliability.

At high traffic times, Uber takes some people who would have otherwise tried to hail a cab, leaving fewer people to fight over the limited cab supply, and ultimately making traveling by taxi cab easier and more reliable.

Lawyers, Uber, cabbies, the Taxi Commission, and possibly DC councilmembers will debate the legality of Uber's operation in coming weeks. Residents should hope they come to a conclusion that lets the service, and others like it, keep running.